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Russian Firms Test Non-Dollar Deals to Sidestep US Sanctions

Several major Russian companies are exploring ways to do deals abroad without using dollars, spurred on by a U.S. threat to broaden sanctions that have impeded access of some Russian firms to the international banking system.

The Kremlin has been pushing companies to conduct more deals using other currencies to reduce reliance on the dollar.

Russian Alrosa, the world’s biggest producer of rough diamonds in carat terms, said it had completed a pilot deal with a Chinese client using yuan in the summer and another non-dollar transaction with an Indian client.

Other companies working on similar transactions include energy firm Surgutneftegaz, agricultural company Rusagro and miner Norilsk Nickel.

Russia’s central bank said this week the amount of non-dollar dealings was growing, with the share of rouble settlements in the Russia-China and Russia-India goods trade now between 10 and 20 percent.

The share was higher in the service industry, it added.

But there are limits to how much business can be shifted.

Major companies still rely heavily on dollar deals and most of Russia’s foreign earnings come from oil sales priced in dollars.

In addition, foreign banks with major U.S. activities may still be wary of business with any entity under U.S. sanctions even if transactions are not in dollars, bankers say.

The United States and its allies imposed sanctions on Russia in 2014 over Moscow’s annexation of Crimea. Washington said in August more measures could follow, after accusing Moscow of using a nerve agent against a former Russian agent and his daughter in Britain.

The new steps, which could be announced in November, may target dollar dealings, U.S. lawmakers have said.

Speed helps

One challenge facing companies dealing in the rouble is the Russian currency’s volatility. Between April 6 and 11, after Washington imposed sanctions on Russian billionaire Oleg Deripaska and some of his companies, the rouble lost almost 13 percent of its value against the dollar.

Alrosa said it avoided the fluctuation risk by completing the Chinese deal in a day. U.S. dollar deals tend to take longer due to associated compliance checks required.

“An increase in the speed of operations is an advantage in such an operation,” the company said in an emailed statement.

Alrosa did not give a value for its China and India deals but said the Chinese buyer had bought a lot at its auction of diamonds of 10.8 carats or larger in Hong Kong. Alrosa data indicates that its lots are on average worth about $100,000.

Alrosa said the banker for its Chinese deal was Shanghai office of VTB, Russia’s second-largest bank. An industry source, asking not to be named, said Russia’s biggest bank lender Sberbank worked on the Indian deal.

VTB and Sberbank declined to comment.

The Chinese client settled its purchase in yuan, which VTB converted into roubles and transferred to Alrosa.

“We carried out the transaction itself in one day, in several hours,” Alrosa said, adding that on this occasion the currency move was in the client’s favor.

No currency hedging was required because of the speed of the deal, the company said, but the client had to open an account in VTB’s branch in Shanghai to complete the transaction.

Alrosa said it was also considering settlement for future deals in Hong Kong dollars, adding that other Chinese clients had shown interest in non-dollar transactions.

Non-dollar limits

But there are limits on how much of Alrosa’s business can switch to other currencies. China accounts for just 4 percent of its sales, while India accounts for 17 percent.

Among initiatives by other Russian firms, Surgutneftegaz has been pushing buyers to agree to pay for oil in euros instead of dollars, Reuters reported in September.

Russian farming conglomerate Rusagro told Reuters that some of its trading operations were in yuan and said this would increase with the expansion of business with China.

Russian nickel and palladium producer Norilsk Nickel said it was discussing the option of rouble payments with foreign customers which have rouble revenue, although it said it had not secured deals under those terms.

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Rural Americans Struggle with Poor Broadband Access

Even in the country that invented the internet, access has remained painfully slow for many rural residents in places like the central state of Arkansas, far from the big cities of the East and West coasts. That may be about to change.

The Federal Communications Commission — a government agency — recently auctioned off almost $1.5 billion in subsidies to get broadband providers to serve an additional 700,000 American homes over the next 10 years. Additional such auctions are planned.

For rural residents in Arkansas — ranked as one of the worst connected states in the country — it cannot come too soon.

“Remember dial-up?” That’s how Ashley Vaughan responds when she’s asked to describe her internet speed at home. She’s a resident of Pangburn, Arkansas, a town of about 600 people. After leaving the area for a few years, she returned in 2015.

​”[Internet speed is] still as crappy as it ever was,” Vaughan said. “I was trying to watch Hulu [a streaming network], and my husband was trying to load a webpage at the same time, and neither of them worked.”​

Rural areas

The issue of poor broadband access — defined by the FCC as fewer than 25 megabits per second (Mbps) — is not uncommon. Almost 20 percent of the American population, or 60 million people, live in rural areas, which generally experience the least connectivity in the country. 

Of those, around 15 million Americans have access to less than 10 Mbps.

In Vaughan’s case, she says her internet speed is only 0.05 Mbps. She’s called her internet provider to complain, but was told her service was the best available where she lives.

To get around the problem, many communities have sidestepped big companies and created municipal networks. Individually, some people spend extra on portable broadband access for their phones.

That slow speed doesn’t just mean fewer shows watched or video games played. It also impacts Vaughan’s son’s schoolwork, which increasingly requires use of a computer. Vaughan describes an instance in which her son took hours to download a single textbook, preventing anyone else in the house from using the internet during that time.

Many households in the U.S. have been wired for DSL, or digital subscriber lines, permitting the transmission of high-speed internet data over telephone lines. Meanwhile, most suburban and urban areas have seen the installation of fiber and copper cables, providing faster service. But many rural areas have been left behind.

“Fiber lines are expensive to install, and older copper lines are expensive to maintain,” said Jameson Zimmer, a broadband analyst with BroadbandNow, a data aggregation company based in Los Angeles.

On average, Zimmer says, it can cost tens of thousands of dollars to run fiber lines, depending on the complexity of the terrain and the length of the line. This means there are fewer internet providers willing to take on that financial burden — giving consumers fewer options.

 “What to do about this is overwhelming,” Zimmer said.

Legislative push

It’s a problem that both Republican and Democratic party leaders are working to solve.

U.S. Senator John Boozman of Arkansas has been one of the leaders in the push for legislation broadening access to high-speed internet.

In an email to Voice of America, Boozman wrote that investing in affordable, high-speed internet would strengthen the American economy. He applauded President Donald Trump for signing an executive order earlier this year to expand broadband access into rural areas but said the issue needs attention from “all levels of government.”

“There is a sense of urgency in the need to close the rural broadband gap. Today, reliable connectivity is just as essential as traditional infrastructure like roads and bridges,” Boozman wrote. “I’ve seen students sitting in the back of pickup trucks outside of schools in order to access the internet to complete their homework.”

Alisha Summerville feels that urgency. She’s a co-owner of the online store ASK Apparel, which launched last year and is based in Pangburn. Even though she relies on her smartphone to do most of her work, the store earns $10,000 to $15,000 a month from online purchases and sells to customers in 18 states.

The store earns an additional $5,000 to $10,000 through a brick-and-mortar store in the neighboring town of Heber Springs, but Summerville says the company was set up to serve online shoppers and it encourages foot traffic to become online traffic.

“That’s where business is going,” Summerville said of internet sales.

Summerville says she takes her internet connection into consideration every single time she makes a decision — from marketing and design to the equipment she uses. Having better broadband access at home would mean she could accomplish a lot more.

“When your internet is down, so is your business,” Summerville said. “When I’m thinking about internet, and I’m thinking about sales, I’m thinking about how much further we could reach.”

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Rural Americans Struggle with Poor Broadband Access

Even in the country that invented the internet, access has remained painfully slow for many rural residents in places like the central state of Arkansas, far from the big cities of the East and West coasts. That may be about to change.

The Federal Communications Commission — a government agency — recently auctioned off almost $1.5 billion in subsidies to get broadband providers to serve an additional 700,000 American homes over the next 10 years. Additional such auctions are planned.

For rural residents in Arkansas — ranked as one of the worst connected states in the country — it cannot come too soon.

“Remember dial-up?” That’s how Ashley Vaughan responds when she’s asked to describe her internet speed at home. She’s a resident of Pangburn, Arkansas, a town of about 600 people. After leaving the area for a few years, she returned in 2015.

​”[Internet speed is] still as crappy as it ever was,” Vaughan said. “I was trying to watch Hulu [a streaming network], and my husband was trying to load a webpage at the same time, and neither of them worked.”​

Rural areas

The issue of poor broadband access — defined by the FCC as fewer than 25 megabits per second (Mbps) — is not uncommon. Almost 20 percent of the American population, or 60 million people, live in rural areas, which generally experience the least connectivity in the country. 

Of those, around 15 million Americans have access to less than 10 Mbps.

In Vaughan’s case, she says her internet speed is only 0.05 Mbps. She’s called her internet provider to complain, but was told her service was the best available where she lives.

To get around the problem, many communities have sidestepped big companies and created municipal networks. Individually, some people spend extra on portable broadband access for their phones.

That slow speed doesn’t just mean fewer shows watched or video games played. It also impacts Vaughan’s son’s schoolwork, which increasingly requires use of a computer. Vaughan describes an instance in which her son took hours to download a single textbook, preventing anyone else in the house from using the internet during that time.

Many households in the U.S. have been wired for DSL, or digital subscriber lines, permitting the transmission of high-speed internet data over telephone lines. Meanwhile, most suburban and urban areas have seen the installation of fiber and copper cables, providing faster service. But many rural areas have been left behind.

“Fiber lines are expensive to install, and older copper lines are expensive to maintain,” said Jameson Zimmer, a broadband analyst with BroadbandNow, a data aggregation company based in Los Angeles.

On average, Zimmer says, it can cost tens of thousands of dollars to run fiber lines, depending on the complexity of the terrain and the length of the line. This means there are fewer internet providers willing to take on that financial burden — giving consumers fewer options.

 “What to do about this is overwhelming,” Zimmer said.

Legislative push

It’s a problem that both Republican and Democratic party leaders are working to solve.

U.S. Senator John Boozman of Arkansas has been one of the leaders in the push for legislation broadening access to high-speed internet.

In an email to Voice of America, Boozman wrote that investing in affordable, high-speed internet would strengthen the American economy. He applauded President Donald Trump for signing an executive order earlier this year to expand broadband access into rural areas but said the issue needs attention from “all levels of government.”

“There is a sense of urgency in the need to close the rural broadband gap. Today, reliable connectivity is just as essential as traditional infrastructure like roads and bridges,” Boozman wrote. “I’ve seen students sitting in the back of pickup trucks outside of schools in order to access the internet to complete their homework.”

Alisha Summerville feels that urgency. She’s a co-owner of the online store ASK Apparel, which launched last year and is based in Pangburn. Even though she relies on her smartphone to do most of her work, the store earns $10,000 to $15,000 a month from online purchases and sells to customers in 18 states.

The store earns an additional $5,000 to $10,000 through a brick-and-mortar store in the neighboring town of Heber Springs, but Summerville says the company was set up to serve online shoppers and it encourages foot traffic to become online traffic.

“That’s where business is going,” Summerville said of internet sales.

Summerville says she takes her internet connection into consideration every single time she makes a decision — from marketing and design to the equipment she uses. Having better broadband access at home would mean she could accomplish a lot more.

“When your internet is down, so is your business,” Summerville said. “When I’m thinking about internet, and I’m thinking about sales, I’m thinking about how much further we could reach.”

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Why America Stopped Shopping at Sears

In the late 1960s, while fledgling new retailers Walmart, Kohl’s, Kmart and Target were hard at work establishing a foothold in the hearts, minds and wallets of the American consumer, the nation’s dominant retailer was busy building the world’s tallest building.

In pouring its funds and focus into Chicago’s Sears Tower, America’s original super-store may have unwittingly become the architect of its own long, slow and painful demise.

“Walmart, the strongest of all those four, wasn’t anywhere near where Sears was for a couple of decades,” says James Schrager, professor of entrepreneurship and strategy at the University of Chicago’s Booth School of Business. “So, if Sears was on top of things, even in the early 80s, they could have been Target or a better version of Kmart, they could have been any of that. But they sat on their hands and built their tower in 1969 instead.”

It’s been a precipitous fall for the one-time retail powerhouse, which this week filed for bankruptcy after years of losses.

Established 123 years ago, Sears was literally the place where America shopped, as its tagline boasted.

Sears had everything from clothing and toys, to tools and appliances. It even sold housing kits. Thousands of Sears homes still stand across America today. For decades, American families eagerly awaited the delivery of the retailer’s several-inches thick mail order catalogues.

The secret to Sears’ success was being able to stay ahead of the market, according to Schrager.

From small stores in small towns, to big stores in downtowns in the 1920s; to a thriving catalogue business for smaller outposts, the main way America shopped right through to the 1950s and 60s; and then the switch to anchor stores in shopping malls through the late 1970s, Sears was always on the move, changing with the times.

But then the retailer seemed to stop evolving.

While the Walmarts and Targets of the world recognized the value of moving away from shopping centers and opening massive spaces in strip malls where customers could park right in front of the store, Sears stayed at the mall.

The competition also developed individual identities and expertise. Target became known for its upscale, fashion-oriented approach, Walmart for superior logistics in smaller towns, and Kohl’s had fashion-only soft goods, says Schrager.

Meanwhile, Sears seemed to lose its focus.

“Sears slowly lost track of its retail business by being fascinated with other things,” Schrager says. “In 1969, they began to build the tallest building in the world, that took a lot of time away from the business. They bought a stock brokerage company, which they had no business doing. They bought a real estate company, which they had no business doing. They developed a wonderful credit card called Discover, which has nothing to do with retailing.”

And along the way, the type of people at the top, the people making the business decisions, changed.

“Merchants are the lifeline of the business and Sears allowed them to wither,” Schrager says. “How do we know that? Because, after a while, Sears wasn’t getting a merchant to run the business. They were getting a financier or a marketer or someone other than a dirty-fingernails merchant who spent their life trying to beat the merchant down the street.”

Edward Lampert, Sears’ most recent CEO and majority shareholder, is a hedge fund billionaire. He took over in 2013 and expressed hopes of turning the company around.

Although Sears just filed for bankruptcy protection this week, Schrager believes the final death blow for the retailer occurred back in the early 1990s.

That’s when previous company executives decided to sell off the profitable parts of the business, while keeping the failing stores. In 1993, Sears shed the Discover credit card, its real estate company Coldwell Banker, and its Dean Witter Reynolds stock brokerage. Allstate, its insurance company, followed in 1995.

“There’s nothing left. Retail walks by you,” Schrager says. “You can’t stand still, and Sears has been standing still since 1969. That’s a very long time. The world has evolved two of three times since then…it’s over.”

While one-time competitors like Walmart, Target and Kohl’s continue to change and thrive, Kmart, which is now operated by Sears Holdings, is also in financial trouble because, Schrager says, it too failed to change with the times.

As for the one-time king of the pack, the next time consumers get excited about buying something at Sears could be when the bankruptcy court rules that the place where America once shopped must itself now be broken apart and sold off for the best possible price.

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Why America Stopped Shopping at Sears

In the late 1960s, while fledgling new retailers Walmart, Kohl’s, Kmart and Target were hard at work establishing a foothold in the hearts, minds and wallets of the American consumer, the nation’s dominant retailer was busy building the world’s tallest building.

In pouring its funds and focus into Chicago’s Sears Tower, America’s original super-store may have unwittingly become the architect of its own long, slow and painful demise.

“Walmart, the strongest of all those four, wasn’t anywhere near where Sears was for a couple of decades,” says James Schrager, professor of entrepreneurship and strategy at the University of Chicago’s Booth School of Business. “So, if Sears was on top of things, even in the early 80s, they could have been Target or a better version of Kmart, they could have been any of that. But they sat on their hands and built their tower in 1969 instead.”

It’s been a precipitous fall for the one-time retail powerhouse, which this week filed for bankruptcy after years of losses.

Established 123 years ago, Sears was literally the place where America shopped, as its tagline boasted.

Sears had everything from clothing and toys, to tools and appliances. It even sold housing kits. Thousands of Sears homes still stand across America today. For decades, American families eagerly awaited the delivery of the retailer’s several-inches thick mail order catalogues.

The secret to Sears’ success was being able to stay ahead of the market, according to Schrager.

From small stores in small towns, to big stores in downtowns in the 1920s; to a thriving catalogue business for smaller outposts, the main way America shopped right through to the 1950s and 60s; and then the switch to anchor stores in shopping malls through the late 1970s, Sears was always on the move, changing with the times.

But then the retailer seemed to stop evolving.

While the Walmarts and Targets of the world recognized the value of moving away from shopping centers and opening massive spaces in strip malls where customers could park right in front of the store, Sears stayed at the mall.

The competition also developed individual identities and expertise. Target became known for its upscale, fashion-oriented approach, Walmart for superior logistics in smaller towns, and Kohl’s had fashion-only soft goods, says Schrager.

Meanwhile, Sears seemed to lose its focus.

“Sears slowly lost track of its retail business by being fascinated with other things,” Schrager says. “In 1969, they began to build the tallest building in the world, that took a lot of time away from the business. They bought a stock brokerage company, which they had no business doing. They bought a real estate company, which they had no business doing. They developed a wonderful credit card called Discover, which has nothing to do with retailing.”

And along the way, the type of people at the top, the people making the business decisions, changed.

“Merchants are the lifeline of the business and Sears allowed them to wither,” Schrager says. “How do we know that? Because, after a while, Sears wasn’t getting a merchant to run the business. They were getting a financier or a marketer or someone other than a dirty-fingernails merchant who spent their life trying to beat the merchant down the street.”

Edward Lampert, Sears’ most recent CEO and majority shareholder, is a hedge fund billionaire. He took over in 2013 and expressed hopes of turning the company around.

Although Sears just filed for bankruptcy protection this week, Schrager believes the final death blow for the retailer occurred back in the early 1990s.

That’s when previous company executives decided to sell off the profitable parts of the business, while keeping the failing stores. In 1993, Sears shed the Discover credit card, its real estate company Coldwell Banker, and its Dean Witter Reynolds stock brokerage. Allstate, its insurance company, followed in 1995.

“There’s nothing left. Retail walks by you,” Schrager says. “You can’t stand still, and Sears has been standing still since 1969. That’s a very long time. The world has evolved two of three times since then…it’s over.”

While one-time competitors like Walmart, Target and Kohl’s continue to change and thrive, Kmart, which is now operated by Sears Holdings, is also in financial trouble because, Schrager says, it too failed to change with the times.

As for the one-time king of the pack, the next time consumers get excited about buying something at Sears could be when the bankruptcy court rules that the place where America once shopped must itself now be broken apart and sold off for the best possible price.

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Верховна Рада ухвалила бюджет 2019 року в першому читанні

Парламент також передав Кабінету міністрів свої пропозиції до бюджету до другого читання

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Верховна Рада ухвалила бюджет 2019 року в першому читанні

Парламент також передав Кабінету міністрів свої пропозиції до бюджету до другого читання

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US Again Declines to Label China a Currency Manipulator 

The Trump administration has again declined to label China a currency manipulator, but says it is keeping China and five other nations on a watch list.

“Of particular concern are China’s lack of currency transparency and the recent weakness in its currency,” U.S. Treasury Secretary Steven Mnuchin said in his biannual report to Congress.

“Those pose major challenges to achieving fairer and more balanced trade and we will continue to monitor and review China’s currency practices, including thorough ongoing discussions with the People’s Bank of China,” he said.

Mnuchin said China — along with Germany, India, Japan, South Korea and Switzerland — would be placed on a list of countries whose currency practices require what the report calls “close attention.”

Governments manipulate currency by keeping the exchange rates artificially low to make its goods and services cheaper on the world market. 

But that puts trading partners and others at a disadvantage. President Donald Trump promised throughout the campaign to label China a currency manipulator once he got into office, but so far he has declined to do so.

Instead, Trump has imposed tariffs on billions of dollars’ worth of Chinese imports to address what he says are unfair trade practices and the trade deficit.

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